Citius Pharmaceuticals (CTXR) posted a 23Q3 loss of $8.5 million or $0.06 per share, $0.01 less than my estimate, mostly because of a $1.1 million decrease in R&D spending associated with all of its clinical programs (except for Halo-Lido, a proposed treatment for hemorrhoids, which was ramping up a Phase 2 clinical trial). The decline in R&D expense was partially offset by a $0.7 million increase in general and administrative costs associated with pre-launch and market research activities for Lymphir, its oncology immunotherapy for the treatment of cutaneous T-cell lymphoma. Interest income increased $0.2 million due to higher interest rates; but stock compensation expense rose by about the same amount.
On July 29, Citius received a Complete Response Letter (CRL) from the FDA regarding its Biologics Licensing Application for Lymphir. The FDA is requiring Citius to incorporate enhanced product testing and certain additional controls agreed during its market application review. It raised no concerns related to the safety and efficacy of Lymphir based upon the submitted clinical data. As part of this process, the FDA is seeking to review certain aspects of Lymphir’s manufacturing process. Citius has requested to meet with the FDA in September to discuss the specific steps required for approval. Under the circumstances, it seems likely that it will not receive FDA approval until the first half of 2024 at the earliest. Product launch would follow within six months of FDA approval. Citius does not expect that remediation efforts related to the CRL will add significantly to its operating costs.
In May, Citius closed a registered direct offering of 12.5 million common shares and 5-year warrants to purchase the same number of shares at a $1.20 exercise price. Net proceeds were $13.8 million after placement agent’s fee and certain other expenses. With this offering, the company ended the quarter with $33.3 million in cash, which it believes will be sufficient to fund its operations until August 2024.
During the quarter, Citius announced that it had achieved the minimum 92-event threshold required to complete its Phase 3 clinical trial for Mino-Lok. However, the data from the trial must be compiled before taking the next steps. As yet, the company has offered no timetable for Mino-Lok’s FDA approval. Citius has also announced positive Phase 2 clinical trial data for Halo-Lido.
CTXR’s stock fell nearly 30% on July 29 to an intraday low of $0.85 after announcing the FDA’s CRL on Lymphir. Since then, it has held its ground, closing last Friday (8/18) at $0.90. As a result of the CRL, the presumed approval and launch of Lymphir have been delayed, which will require another equity raise by August 2024 that will likely be larger than I originally anticipated. Since the approval process for Lymphir still appears to be on track and with the positive news on the Mino-Lok and Halo-Lido clinical trials, I am maintaining my price target of $1.50 on Citius’s stock and my performance rating of “1” (Buy).
This is a summary of my recent report on Citius Pharmaceuticals, Inc. (CTXR), which was published on August 21, 2023. To obtain a copy of the full report, please reach out to me using the contact information provided below.
August 21, 2023
Stephen P. Percoco
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